COVER STORY: 'Level playing-field' crushes Australian farmers

The Australian Farm Institute has become the first leading Australian farm organisation to conclude that there is virtually no chance of achieving world free trade in agriculture.

Opening up the US, EU and Japanese markets to free trade in agriculture has been the cornerstone of Australia's agricultural policy, as pursued by the National Farmers Federation, many peak farm organisations, the Department of Foreign Affairs and Trade, federal and state agriculture departments, and the Liberal, National and Labor parties.

News Weekly has long argued that a level playing-field in agricultural trade was never achievable, therefore a new model was needed for Australian agriculture.

Now the AFI's executive director Mick Keogh has concluded: "Perhaps it is ... Time to stop assuring Australian farmers that agricultural trade liberalisation is 'just around the corner', and instead to recognise the reality of a continuation of the distorted agricultural trade environment that has been experienced over the last 50 years.

"The promised pot of gold for Australian farmers at the end of the 'level playing-field' rainbow is as distant and elusive as it has ever been."

The AFI is Australia's leading agricultural think-tank. Mr Keogh's conclusions were from his editorial in the latest issue of the AFI's Farm Policy Journal, which is dedicated to re-evaluating the elusive push for free trade in agriculture.

In the 1980s, Australian farmers were told that, as the General Agreement on Tariffs and Trade (GATT) evolved into the World Trade Organisation (WTO), a new era of agricultural free trade would dawn. It didn't.

Then farmers were told that the Doha Round of WTO negotiations on agriculture would see the opening up of agricultural trade. Now the AIF says that is an illusion.

Europe, Japan and the US regard agriculture as a strategic industry. Europe and Japan faced food shortages and starvation in World War II and in previous wars. This experience has powerfully shaped their determination to be as self-reliant in food production as possible.

In his media release, Mr Keogh added: "The message for Australian farmers and policy-makers, who for many years have persisted in the hope that progress would eventually be made in lowering agricultural trade barriers, is a sobering one.

"After digesting the considerable detail in the papers contained in the current Journal, it is hard not to come to the conclusion that international trade negotiations are now more to do with finding new definitions and rules to appease every possible national exception, than they are to do with actually reducing impediments to agricultural trade.

"The overall picture that emerges from these papers is that progress in achieving reductions in agricultural trade barriers is at best likely to be tortuously slow.

"In fact, very real questions emerge about the continuing value of Australian engagement in the Doha trade negotiations, and also in the Cairns Group."

In his editorial, Mr Keogh says that "there are some who argue that in many respects trade in agricultural products has become more rather than less restricted over recent years, and this trend is likely to continue into the future."

Indeed, Caroline Saunders and others argue in the Journal that the re-introduction of dairy export subsidies by the US and the EU, despite promises to stop these subsidies, is evidence that liberalisation in agricultural trade has regressed rather than progressed.

Daniel Griswold and Sallie James similarly argue that the policy measures in the 2007 US Farm [Subsidies] Bill remained largely unchanged from earlier farm bills. Cumulatively, they have transferred over $US1.7 trillion from US consumers and taxpayers to farmers over the last 20 years.

The AFI makes one mistake in its assessment. It refers to Australia's "predominantly export-oriented agricultural sector".

The AFI devoted an earlier edition of its Journal to the value of farm production in Australia. It concluded that when the value of farm inputs, farm-gate output and downstream processing were considered, agriculture contributed about 12.2 per cent to the national economy, worth around $130 billion.

However, gross exports of food and beverages are only around $14-16 billion a year (Australian Bureau of Statistics: 5368.0 International Trade in Goods and Services, Australia, issued September 3, 2009). Even when fibre exports (wool, cotton and timber) are included, this hardly makes the export market the predominant market.

Pot of gold

At the heart of Australia's farm crisis has been the belief that the export market has been the most important for farmers, and therefore, once the WTO opened up free trade in agriculture that Australian farmers would find the pot of gold at the end of the rainbow.

To help them on their way, the dismantling of farmers' marketing agencies and greater rivalry from imports would force farmers to compete more against each other, thus making them more efficient, so that they, not other countries' farmers, would supposedly benefit from that pot of gold.

That illusion is now disintegrating, and it has been at a terrible cost to Australian farmers.

Patrick J. Byrne is national vice-president of the National Civic Council.